Bitcoin Supply Is Being Absorbed By Powerful Financial Players — What This Means

Ben Graham · January 5

Bitcoin was designed as a decentralized monetary network with no single point of control, but the structure of its ownership is quietly evolving. As issuance declines and liquidity thins, a growing share of the BTC circulating supply has been moving into the hands of powerful financial institutions, resulting in a steady accumulation that reshapes the dynamics of the BTC market, liquidity, and long-term distribution.

Does Institutional Adoption Change Bitcoin’s Purpose?

The financial-industrial complex is in the process of centralizing as much Bitcoin as possible. Crypto investor Simon Dixon has revealed on X that institutions want to accumulate BTC as a useful tool for managing the final capital outflow squeeze once it is ready, following its Western asset-stripping operations.

As BTC is a proof-of-work, accumulating it does not grant governance control or long-term price discovery. However, the accumulation does provide the tools needed to manage short-term price action. Institutions are in the accumulation phase, and they want self-custody for themselves and institutional custody for everybody else. Therefore, they can channel large capital flows into BTC while preserving an exit tool for sovereign wealth.

This is similar to how the British Empire utilized tax haven islands as escape valves. According to Simon, BTC is one of their exit strategies for managing sovereign wealth in a world where custody of vast gold reserves requires trusted custodians. Nothing has changed in terms of how to prepare, and the strategy remains to own more BTC in self-custody this month than the previous month. Any price suppression now is an opportunity; it won’t last.

Furthermore, the financial-industrial complex will engineer volatility through instruments like MicroStrategy and its derivatives ecosystem to margin-call as much BTC as possible while building more leverage tools. This isn’t about crypto, but a Silicon Valley liquidity grift, which is a way to supplement VC returns with added liquidity layered on top of private equity. Crypto is a technical industrial complex operation to build out the digital control grid.

Why Bitcoin As A Financial Lifeboat

The lesson of Venezuela is the best advertisement for Bitcoin ever created. Investor Fred Krueger noted that those who still had Bolivars in 2016 when hyperinflation began had a clear chance to accumulate BTC when it was trading below $1,000. Instead, they lost absolutely everything.

In 2018, when the regime rolled out the Petro, buying BTC instead would have delivered over 30% in returns. That altcoin that represented oil was limited and was shelved in 2024. This is the lesson for the BRICS. “Maduro and his inner circle probably owned very little BTC, believing they would remain in power forever, but a lot of them are regretting that today,” Fred noted.